Equity Compensation Planning For RSUs And Stock Options

Equity compensation is pay delivered as an ownership stake in your company rather than cash. For technology employees, it most often arrives as Restricted Stock Units, stock options, or an Employee Stock Purchase Plan. Each type vests and is taxed on its own schedule, so the right approach depends on which forms you hold and how they fit the rest of your plan.

When RSUs vest, the fair market value of the shares becomes ordinary wage income on your paystub. Employers withhold federal income tax at the 22% supplemental wage rate, and 37% on amounts above $1 million per employer in a calendar year, under IRS Publication 15 for 2026. Because 22% is below the bracket many equity-compensated professionals fall into, a large vest can leave a balance due at filing. Withholding is not the same as the tax you owe, which is settled on your return.

When a large share of your net worth and your paycheck both depend on one employer, a single company's performance can drive your financial outcome more than you may intend. A concentrated position can be reduced gradually and thoughtfully, with attention to taxes, so you keep meaningful upside while spreading risk across a diversified portfolio aligned with your goals.

California withholds a flat 10.23% state income tax on stock options and bonuses at vesting or exercise, under California EDD guidance (DE 231PS) for 2026. This is a withholding rate, not your final state tax, which is reconciled on your California return. For our Silicon Valley and San Jose clients, we coordinate this with federal withholding so the combined picture is clear before a vesting event happens.

Both. We offer in-house tax return preparation and ongoing tax planning alongside investment management, so your equity decisions stay coordinated with your return. Planning a vest or an option exercise with your tax picture in view is very different from discovering the result the following April.

Equity compensation is one focus area within our broader financial planning and wealth management services. The same team that plans your vesting and taxes also handles your investment management, retirement planning, and estate strategy, so a decision about your shares is measured against the rest of your plan rather than made on its own.

No. We meet clients in person at our Morgan Hill, California, and Brookfield, Wisconsin offices, and by video anywhere in the country. Our process is built to review your equity plan, share documents, and stay connected just as easily online as in the room.

Yes. Our advisory recommendations are made in your best interest. As CERTIFIED FINANCIAL PLANNER professionals, we design advice around your goals rather than product sales, and we are glad to answer any questions about how we work and how we are compensated.

Reach out through the Contact Us page or call (800) 584-3652. We will schedule an introductory conversation to understand your equity awards, your timeline, and your goals, then outline how we can help you plan around them.